One Country, Many Systems: Inside China

As Hong Kong is reunited with China, it will change the mainland as much as China changes it

By Johanna Mc Geary With reporting by Jaime A. FlorCruz/Beijing and Mia Turner/Shenyang

(TIME, June 30) -- One country, two systems. Beijing's promise to Hong Kong has the virtue of simplicity. In the West it conjures up the notion of a tiny island of advanced civilization lodging precariously inside a primitive, monolithic communist mainland. In China, though, it's a glaring understatement. Two systems? China today has dozens of political and economic experiments jostling one another, all progressing in different directions at different speeds. One country? China is many countries already. Hong Kong will be just one more participant in an unfinished revolution.

The People's Republic is still a police state with one firm red line: Thou shalt not overthrow the Communist Party government. Yet the vast majority of Chinese people are surprisingly free. The society is so rapidly reshaping itself that even its own leaders are often overwhelmed. This vast, tumultuous land is a startling work in progress that has abandoned orthodox Marxism but not yet settled on fixed alternative arrangements. The Chinese are no longer what they were but are not sure what they will become.

This story is not about the Politburo in Beijing or even the thousands of dissidents locked away in jails. It is a tale of ordinary people in three regions, no more but also no less representative of the "real" China. While communism and democracy form the two poles of the country's political drama, most Chinese live their lives somewhere in between, feeling their way cautiously forward. Politics remains hard for people to discuss, not just because they are afraid to but because that is not primarily where their interests lie. Many do not yet have a vocabulary that extends beyond the freedom to get rich. But some are, slowly, expressing aspirations for greater guarantees of personal liberty, for laws they can understand and trust.

The country is a mosaic of backwardness and new thinking, of worship of Mammon and nostalgia for Mao. Hong Kong poses no graver threat to the powers in Beijing than homegrown forces already at work; the embrace of individual enterprise has forever undermined the basic tenets of communism. The pace and uncertainty of this unique transition frighten as many Chinese as they embolden. Whatever the Chinese are on the way to becoming, they offer this counsel: Naixin. Patience. Xuyao shijian. It takes time.

Shenyang A grimy city where they miss Mao

Night is when Shenyang comes alive. Young and old, families and flirting teens swirl around the towering, 35-ft.-tall statue of Mao Zedong. Here Mao lives, a hero still. In his long shadow, fan-twirling line dancers stomp through a traditional peasant rite. Doctors in grubby white coats offer herbal medicines, acupuncture or blood-pressure tests. Vendors proffer savory kabobs or key chains. Children rent old-fashioned roller skates for a few yuan, while their elder brothers play badminton without any nets. The throng does not disperse until the blazing phosphorus lights dim near midnight.

Daylight betrays the real Shenyang, a grimy industrial town northeast of Beijing that is sunk in despair. Once the shining star of Maoist industrial production, the city has lost its way in the changeover to private enterprise. Last night's revelers have been replaced by a handful of dejected men with nothing to do but smoke. More bicycles than cars circle the square as those still toiling in the antiquated state-owned factories that make products no one buys head for their redundant jobs. The reason so many people pack the square at night, says an only nominally employed factory worker we'll call Liang, "is that they don't have to get up early to work."

Liang, at least, is earning money. Not from his official job at the factory making electrical machinery. That decrepit state enterprise hasn't paid him regularly in three years. Like everyone else with any gumption in Shenyang, Liang has turned to moonlighting, with his bosses' eager blessing. There are just three choices for independent entrepreneurs here: restaurants, but that takes capital and there are few customers; street vending, but that requires a product to sell; and driving a cab. Liang chose the cab, a ramshackle Lada he must hot-wire each time he starts it. He rents the car for 194 yuan ($23) a day, and from 5:30 a.m. to 5:30 p.m. he roams the city, picking up enough fares to keep his family alive. He says he takes home about 3,000 yuan ($365) a month, riches compared with his theoretical factory salary of 300 yuan.

Most of Liang's colleagues at the factory are too frightened or too indolent to follow suit. Shenyang is a warning to the government that it cannot easily trade in communism for completely laissez-faire capitalism. There is no national welfare system for workers like Liang. If they leave their work units, they lose their housing, health benefits, education subsidies, pension rights.

Liang has earned enough driving his cab to share purchase of a 10,000-yuan ($1,220) house with his father, a low-ranking city bureaucrat, but he worries constantly about financing his daughter's education now that the factory will not. "That costs me 300 yuan a month," he mutters, "plus extra for the English tutor." Liang is determined that his 11-year-old daughter will "never, never have anything to do with the factories." Somehow he's going to find the 40,000 yuan it will take to put her through high school and training as an accountant. "I was stupid. I wanted to go into the factory because they told us this was the heart of China, the way forward. It would set me up for life. My parents said I'd share in the iron rice bowl. Huh!" he scoffs.

The blighted streets of Shenyang's Tiexi district industrial zone tell the troubling tale of China's ailing state sector. White-elephant plants like these all over northeast China account for less than half of the total economy but still employ two-thirds of the labor force. Beijing insists the national unemployment rate is only 3%, but no one believes that. In Shenyang some guess the real rate is closer to 20%. "China has 1,000 terms for unemployment," notes a Western diplomat. Most of the jobless are said to be "waiting for a new post" or "awaiting retirement" or "relocated for internal digestion."

Bloated work forces are weighing down even potentially profitable enterprises. When the Jinbei minivan plant wanted to acquire land including a brickyard to expand its factory in the late '80s, it had to take on the brickworks' 2,000 employees as well. Nonetheless, five cities in the northeast dismissed or "resettled" more than 420,000 workers last year, and the provincial government in Shenyang has announced it will cut an additional 200,000.

Because of strong family ties in Shenyang, most of the jobless have not joined the floating population of migrants, now at least 100 million strong, who drift around China searching for work. So the city has permitted a handful of carefully controlled labor markets to help employ a few thousand of the laid off. At a grubby park in Tiexi, the city lets job seekers "advertise" their skills for a few cents. At a stranger's approach, they point eagerly at hand-lettered signs identifying them as would-be cooks, maids, nannies, hotel clerks, laborers. But at least half a dozen armed police immediately materialize, discouraging interviews.

The majority of Shenyang's legion of disgruntled workers are invisible, but they pose the most serious threat to China's political stability. The city labors under omnipresent police, armed cops patrolling the streets of the industrial zone, gun-toting guards standing sentry in factory doorways, plainclothesmen nosing into every stranger's business. At any sign of citizen anger, party officials respond quickly to keep the city quiet, fixing water mains or repairing broken heaters. The city's new technocratic mayor has permitted small, regular, controlled demonstrations at city hall to let citizens vent their spleen about unpaid pensions and missing salary checks. But there have also been at least two large, unauthorized protests in Shenyang. Internal memos have circulated among party leaders warning of strikes, police confrontation, widespread outbreaks of crime. But no significant pockets of dissent have formed among the people. "They are not content, but they are not going to get in the government's face," a Western diplomat says. "This is not Gdansk."

In fact, workers like Liang look back with misguided longing to the days of Mao for their salvation. If they had their choice, they'd retreat to 1955 rather than grapple with today's complicated reforms. "We respect Mao, not Deng," says Liang. "Deng forgot about us." The people of Shenyang resent the way the city has been left behind by the capitalist advances in Shanghai and Guangzhou. At Liang's old workplace, his friends sit around all day grousing, drinking tea and reading the papers until the shift whistle blows. "We call it the nonworking day," he says. "The managers are screwing things up, and they have to leave. It's not our fault there's nothing to do." During Mao's time, he says, "we would work hard because the factory would take care of us. Now if they do not pay us, we have nothing at all." Before, says Liang, "social welfare came first. Now, as long as you make money, that's all that counts."

Under Mao, he says, "who dared be corrupt?" Shenyang's workers complain angrily that bosses are pocketing all the wealth through bribery, kickbacks and payoffs. That bothers them even more than their own low salaries. "If you were corrupt under Mao," Liang says, "you'd be purged. Now they just tolerate it." Shenyang's citizens "loved" Beijing's recent Strike Hard crackdown on crime and corruption. When U.S. officials noted that some innocent people were jailed during the ruthless campaign, Shenyang applauded. "They said only bad people got caught," says a Western diplomat.

China's leaders have been paralyzed by the conundrum of Shenyang. Failure to stop the spiraling losses of the state factories could destroy China's economic miracle, yet the cure is an exceedingly bitter one: the dismantling of the system that guaranteed workers lifelong employment and social benefits. Pushing ahead with reform depends on how much pain and suffering people will take before they resort to rebellion. In March, Finance Minister Liu Zhongli acknowledged that reform of the enterprises was "important for the destiny" of the nation, but President Jiang Zemin has been moving ahead very cautiously. He seems to hope half measures like increasing worker shareholding or small-scale mergers can bail out basket cases like Shenyang.

Desperate times demand desperate measures, however, and a few adventurers in Shenyang are forging reforms, even some that may be technically illegal. In many cases, the government looks the other way or even endorses such improvised solutions. What Zhang Hongwei is doing at the state-owned Jinbei minivan factory would hardly shock a Guangdong businessman, but his ways are considered dangerously radical here.

Zhang is no foreign import but a 30-year veteran of the state factory system, a lifelong auto man who runs one of the few profitable heavy industries in Shenyang. When the plant, burdened with 7,000 workers making shoddy cars no one could afford, foundered in the early '90s, the Hong Kong conglomerate Huachen wheedled a 51% share as a joint venture. It went out looking for a mainland general manager and found Zhang.

"Management is the key," he says. Subject only to his board of directors, he can make all decisions himself: "I don't always have to listen to the government." Zhang reduced the work force to 6,400, then farmed out an additional 1,000 workers to small related industries like repair shops. He started a plastics plant to absorb 2,000 more. "Here it is illegal to lay off workers," he says, "unless I can find them other jobs."

Zhang, 51, has wrought a revolution with the workers who remain. The hardest concept for them to grasp was that they would be rewarded according to their performance and that every single screw had to be made right if the whole product was to be good. "I can demote people who fail to produce," he says. Workers were in shock when he downgraded the first lazy mechanic. Zhang warned them, "If you don't work hard enough here, then you will work hard at finding work." He bases all salaries on productivity and pays bonuses for top-notch performance. He holds quality-control workshops, and when workers make mistakes, he does not fine them but teaches them how to do better. The company has been in the black since 1993, turning out 100 Toyota-style vans a day under contract to bus lines and police units. "We could make twice as many, but Toyota won't give us the parts," he says.

It will take time, he says, but his workers are beginning to change their outmoded thinking. "When they see the success of the factory, they are willing to go along with my ideas," he says. His managers too have had to shape up, learning to lead by example. He has sent 200 overseas to study modern management techniques at Toyota plants. He gives his workers a week's paid vacation and shuts down the whole factory for nine days in July. He bought a soccer team to carry the vehicle's name, Haishi, onto the field. He even holds dances for the workers. "I want them to love the factory," he says. "If the workers are afraid of management, they won't do good work."

Despite modernized management, corruption still plagues the Jinbei plant, but Zhang says he is determined to stamp it out. "If I hear of it, I fire them," he says, "no matter if they are a party member or whoever." When a middle manager persisted in taking suppliers to lavish dinners after repeated warnings to stop, Zhang sacked him. "The highest cadres can't be corrupt because if they are, the rest are," he says. Although Zhang is a party member, he says there is no party secretary--except in name--involved in factory affairs. "Our work has no relation to all that," he says.

Jinbei's success has not been much emulated in Shenyang. For most of the city's despairing residents, attention is fixed on the next meal. They have no time to think about larger concepts. "I don't know how anyone will improve things," says a taxi driver who has waited at the airport for five hours in hopes of a fare. "Even when we work hard, we live bitterly."

Tuonan Township Planting the seeds of capitalism

To change China, you have got to change the rural areas. To change the rural areas, you have got to change the women. If you change a man, that's only one man. If you change a woman, that changes whole families." So says Wu Qing, a Beijing professor and social activist, and out in Tuonan township, in Hebei province southwest of Beijing, she's right.

Hebei's brick-and-stone villages punctuate a verdant landscape neither rich nor miserably poor. Only the marching platoons of the People's Armed Police--military units converted for internal riot control after 1989--in the provincial capital of Baoding mar the peaceful, bucolic scene a mere two hours by superhighway from the capital. This is ancient farm country, tilled by hand not much differently from the way it was done a thousand years ago. Tuonan township includes dozens of microscopic villages, half on the cultivable plateau, half in the steep little hills of the Taihang Mountains. People here did not often starve, but neither did they rise above the subsistence wage earned from growing their state-mandated quota of wheat and millet. With the advent of market economics in 1979, farmers were freed from some of their required grain production, but no one really knew how to take advantage of the new system.

Then Li Dongju had a radical idea. "We had a lot of people here and very little arable land," she says shyly, her strong fingers twisting together as she talks to the first foreigners she has ever seen. In the winter of 1984, she persuaded three other families to help her reclaim the barren, rock-strewn floodplain of the river next to her minute farm plot and turn it into fertile land. They picked up the stones by hand. They walked to the hills a mile away and carried back topsoil in baskets to dump on top of the thick river silt. Their hands froze; bitter winds cut through their cotton clothes. The other families lost heart, and only Li and her husband persevered.

"The government said, 'If you want prosperity, give birth to fewer children and plant more trees,'" recalls Li, 43. So she planted trees: peach, plum, persimmon. Today she owns 32.5 acres of rich orchards with 3,000 trees yielding an income of at least $20,000 a year. In the village they call her daitouren, leader, and many others have followed her example. Among the long rows of fruit trees on 300 acres rehabilitated by the village are dozens of "10,000-yuan" households--meaning rich by rural standards. "Changing our ways is something that can't just be done by edict," says Li Xiumin, a leader of the county's branch of the All China Women's Federation in Hebei. "Peasants are very pragmatic. They must be able to see what works, and then they will believe in it."

The same learning-by-experience process underpins rural political development. In Tuonan township, people have been able to vote directly for village leaders since the late 1980s. But when elections were first authorized, the people barely understood or trusted them. Gradually they came to embrace the notion of choosing their own chiefs.

But they do it in their own down-to-earth way. Li Dongju's husband Zhang Zhanzha, 45, was elected vice chairman of the village committee last year on the strength of the family's commercial success. He did not need to campaign. The farmers here have no use for bluster or bombast. "It is not the Chinese way to brag about 'how great I am,'" says Li Xiumin. What villagers respect and what they vote for is practical achievement. "If there is no proof you can do things, the voters think you are just an empty talker, and you will never win," she says. By the time elections come round, voters already know who can deliver and who can't and cast their ballots with little fanfare. When leaders were appointed, says Li Dongju, they did not always know what was good for the village, and they could not count on the support of their constituents. "Now we have better management," she says, "because our leaders enjoy the approval of the people."

In rural villages all over China, citizens are learning about the electoral process from the bottom up. Some skeptics say village elections are merely a means of siphoning off local discontent before it percolates to the national level. But even so, it is proving insidious; already the principles of accountability have penetrated higher levels. In Mancheng county, the next level up from Tuonan township, posts are tightly contested even in indirect elections. Candidates for nomination are grilled by their peers who want to know what they have done to advance local prosperity. To get on the short list for selection by the village representatives, "we really make the candidates sweat," says Li Xiumin. The grass-roots representatives vote with their guts, she says, so "anyone who has tarnished his record or become disliked by the villages will be rejected." Her job on the county committee as an All China Women's Federation representative is appointive, but, she says, "if I were just an armchair bureaucrat, they'd laugh at me."

Looking across her lush orchards, Li Dongju says her aspirations are fulfilled. "We feel like we're free here," she says. Free to get rich, if they can. Free to focus on family matters, village problems, the immediate society, without interference from the government or the party. But Tuonan township is not ready to stretch its new thinking to national politics. Li Dongju credits her achievements to Deng's "wise opening," and she resents it when outsiders say China's ways are all bad. If there is a rising tide of nationalism, it lies less in dreams of hegemony than in anger at the patronizing demands of the West. "We are very proud of China and of being Chinese, and we do not like foreigners to criticize our ways," says Li Xiumin. "It is like a family. You know there are problems in your family, but you do not want other families telling you what to do."

Zhao Yanhui, 44, has learned to love elections. "Unless the people approve of you," she says, "you can't get them to do anything. Now we know elections are the best way to get good things done." But such political progress hasn't paid off financially in Yangzhuang, a village of 1,200 not far from Li Dongju's peach orchards. Her neighbors say Zhao would "naturally" win any vote, but her current ambitions are all economic. Yangzhuang has no rich orchards, no 10,000-yuan households and little arable land. Hardscrabble farming is still the daily lot as fathers struggle to make a living and sons go off to towns in hopes of more gainful employment.

So Zhao has espoused a capitalistic cottage industry. She has organized 24 women into a sweater "factory" created to bring in some disposable income. When they are free from their farm chores, the women gather in two low buildings they have constructed to house knitting machines purchased with their pooled cash. Working from orders and samples provided by a state trading company, they turn out as many pullovers and cardigans and vests as they can manage. Each woman averages 300 to 400 yuan ($36 to $48) a month. "We are the envy of the village with that income," boasts Zhao.

Zhao enjoys considerable prestige beyond the knitting factory. One slow step at a time, she is bringing new ways of thinking to her fellow peasants. Village women come to her for advice on organizing family chores, raising children, being better wives, becoming better citizens. Even the men, conservative and suspicious, listen to her because of her enterprise and the wealth it has earned. "We needed to clamber out of poverty," she says. "I thought if I could do this, it could make other people's lives better too."

Zhao has become, without realizing it, a protofeminist. Once they earn money of their own, women like her break down the old tradition of male superiority. "If wives can't do anything for themselves," she says, "husbands just look down on them." Zhao used to be afraid to give a speech and could only read it, head bowed, eyes down. Now she speaks boldly and confidently, bubbling over with plans. Her daughter, 23, has gone to work as an accountant in the southern boom town of Shenzhen.

Money in their pockets, agrees Li Xiumin, is the prerequisite for confidence and self-esteem, and it is not easy to acquire in these rough hills. She has been working hard to teach the poorest villagers that the government is no longer going to provide them with handouts and that they have to take responsibility for their own economic advancement. That is the most difficult thing for them to change, she says. "The government has conditioned them in the opposite for so long," she says. "Now we have to make them understand that they must use their own enterprise to solve their problems and that the government will only help those who help themselves."

But each small step, says Li, makes the Hebei women want to expand their horizons further. So she invites speakers from the provincial capital and even Beijing to give lectures about the world beyond Tuonan township. "Only if we liberate our minds can we liberate the country," says Li. Shi Meirong, 52, who lives in the hill village of Lingnan, would like to believe her, but Shi is still on the very first rung of economic development. "Only when you have money can you be master of your fate," she says. "When you're just struggling to get by, it's hard to have bigger visions."

Guangzhou A frenzied city in headlong pursuit of cold cash

Chaos has already come to China: its name is Guangzhou. This southern madhouse of a city lashes the nerves. Noise. Dirt. Pollution. Crowds. Blinding neon ricocheting off mirrored towers. Ceaseless tearing down and building up, with no visible organizing principle, just decrepit neighborhoods vanishing into gaping construction holes. It is Hong Kong without the veneer of British order, capitalism out of control. This is the world of money, money, money; a city that never sleeps, with dress shops open at midnight and vendors hawking at dawn. No wonder its presiding genius is Deng Xiaoping, smiling down from a giant mural.

No wonder too that Rusa Won traded her dull secretarial job with Procter & Gamble for a high-glam marketing post at the Rock 'n' Roll Club. Guangzhou's hottest dance mecca lures a thousand free-spending hipsters a night at 80 yuan ($10) a head. Amid flashing lasers, throbbing strobes, wafts of colored fog, Guangzhou's young and rich pulsate to the pounding, 200-decibel beat of Western rap. "Politics?" hoots an 18-year-old who calls himself Jeff. "We come here to play." "Politics!" laughs his sister, 22, swiveling and shimmying. "I just want to relax!"

Business, like the entertainment business, is where the money is. "People here don't want to think about politics," says Rusa Won, who is all of 24. "Hong Kong people make a big deal out of politics. Guangzhou people come here to forget that stuff." The Cantonese, everyone freely admits, just want to make money. That's why Rusa Won disobeyed her parents to take this "not respectable" job paying 6,000 yuan ($730) a month, considerably more than her parents earn.

Money only partly accounts for the heavy security inside the club. Virtually every 5 ft., a private guard decked out in mock-military garb sternly surveys the floor from an elevated watch post. The consortium that owns the club doesn't want a whiff of trouble with the authorities. "We make sure we do everything legally," says Rusa Won, rolling her eyes as she ticks off the police inspectors and health inspectors and fire inspectors and bureaucrats who come regularly to check compliance. Rusa Won regards dealing with such matters as part of the experience necessary in the street-wise world of Guangzhou. "You learn who gives a sweet smile and who gives a phony smile," she says. "You learn how to manage employees, take care of customers."

Guangzhou was the first city to open for business after Deng launched his economic reforms in 1979, and its vibrant populace threw itself headlong into the pursuit of cold cash. Taking advice and investment from Hong Kong, Guangzhou hustled to become China's third biggest consumer market, second most important transport hub, third best attractor of foreign investment. Today Guangzhou's tycoons worry about competition from Hong Kong, and Beijing worries about the example Guangzhou sets for China.

The unbridled boom has brought wealth, yes, but it's wildly uneven. The typical Sunday shoppers crowding middle-class Beijing Street are looking, not buying. Most of Guangzhou's workers have little disposable income. Two 18-year-old youths stand in the spiffed-up Xinhua bookstore gazing at a paperback that at 8 yuan is beyond their means. For fun, they go to the zoo because it's free.

Johnny Chan stands glumly behind the counter at his Hong Kong Optical Shop. The 1,080-yuan ($130) Ray-Bans gather dust, while the 100-yuan models are moving briskly. Nearly five years ago, Chan came back to Guangzhou from Australia because he thought fortunes were to be made here. But business has soured since 1994, he says, and his two city shops are losing money. Even worse is crime. "Guangzhou is very bad," he says. "So many bad men, pickpockets, they all steal." Ever since he was mugged and badly beaten one morning, Chan takes two bodyguards when he ventures out. Now he wears no expensive watch, carries no cell phone ("the prime evidence you have money") and hides his emergency beeper in his pants. The authorities are no help, he says. "They just want your money too."

The city formerly known as Canton has been infected by capitalism's mercantile excesses ever since the West forced open its doors as a treaty port in 1842. Today Guangzhou is China's best example of the worst the West has to offer. Its take-no-prisoners style has encouraged official corruption and ruthless business practices. "Corruption is normal," shrugs businessman Wang Shi. "Crime is new." So are beggars in the streets. This is a city that thumbs its nose at the government, holding on to as much of its wealth as it can, ignoring orders it dislikes, following its own drummer. Guangzhou's party chief, Gao Siren, says he wants to steady the city's headlong pace to a more controlled, sustainable drive, but everyone in Guangzhou is too busy making a fast buck to pay attention.

The Cantonese revere men like Wang Shi, at 46 the self-made chairman of the board of the Vanke Co. His personal journey mirrors nothing less than the nation's own during the past three decades. His father was a veteran of the Long March. Young Wang Shi was a Red Guard at 15, a soldier in the People's Liberation Army at 18, an independent entrepreneur at 33, a tycoon at 37, a supporter of the students in Tiananmen Square at 38. He was forced to stop working for a year after he marched his workers into the street to protest the massacre of pro-democracy demonstrators. Today he feels an unusual ambivalence about his riches: "Money is trouble. Lots of money is lots of trouble." He won't say how much he earns, but his fine blazer, gold watch and chauffeur-driven Mercedes suggest a substantial income. "Look," he says, "China is still a communist country, so it's very sensitive about private ownership. Flaunting what you have is only a provocation." Actually, he doesn't entirely believe in rampant capitalism either. "You make money for society," he says with considerable sincerity in his open, animated face, "to give something back to society." His $300 million corporation specializes in real estate, but it builds primarily middle-class, relatively affordable housing at a low--well, 25%, compared with Hong Kong investors' 40%--profit margin.

Now Wang is worrying about Hong Kong and the impact of its businesses after the handover. "We see them as competition," he says, but he believes he has a two-to-three-year lead on their "learning curve" once they're inside the domestic market instead of outside. "We are looking to the middle class for our market," he says. "They want the elite." Still, he is searching for a merger partner to acquire more capital.

Wang's list of intellectual influences would horrify Mao and his own father: the Voice of America, to which he secretly listened in the 1970s; Hemingway and Jack London, who taught him "humanism and individual strength"; Toynbee and Sam Walton. The Wal-Mart founder, he grins, was just like a communist: "He reinvested all his profits in his company, and he drove a peasant car."

As a Red Guard during the Cultural Revolution, Wang traveled around the country for free and saw much of his vast nation. "It was fun," he says, until the violence revved up in 1968. Unable to go to school, he took books on political economy out of the library to understand the convulsions. But what he sees now is a China in which politics and economics have split apart. "Before," he says, "everything passed down from the government to the peasant, everything." The market idea is that people have to make money from the bottom up. "So we do anything we want to make money, and that is not related to what the government does." Beijing still controls certain things like "propaganda and national security," but as businessmen, he says, "we just don't go into that. What we're concerned with is making money, and nothing they say up there affects our ability to do that." If Hong Kong stays away from pushing Beijing where it is sensitive, he adds, "Hong Kong can do what it likes too."

Personally, he says, the Chinese now have great freedom. "I can say what I want. If you succeed here, it depends on yourself, not on politics." As recently as the '80s, he says, the government was far more intrusive into corporate and personal life: development has been a cycle of shou, tightening, and fang, release--tightening, release. "Now we are in a period of release," says Wang, "and that's always hardest for the authorities to handle."

Like that of so many Chinese, Wang's behavior during the Tiananmen democracy protests was less clear-cut than it seems. "Students are students," he says. "They always have opinions. We had them in the Cultural Revolution. That's normal for students." He won't say whether he shared the Tiananmen protesters' ideas, but he went to the square, and when he saw the filthy, desperate conditions, "I felt a humanitarian urge to help." So he gave the demonstrators money, medicine and tents and went home. But then, he says, "I couldn't stand it when they started shooting. I found that unforgivable." So he mustered workers in Shenzhen to go out into the streets and proclaim that the crackdown was wrong. Local authorities blacklisted him for a year, his friends admonished him, and he even criticized himself. "I did something wrong," he muses now. "As a chairman of the board I was a symbol, not just an individual. So I should have stepped down before I protested. Even in the U.S.," he adds, "I don't think you would like your chairmen of the board to do that."

While Wang Shi is often cited as one of his generation's coming leaders, he's not so sure. "I'm seen as someone who stands on his own," he says, "who stands outside." To those who would make him the new revolutionary, he says he is interested in economic democracy, not political democracy. "If we can just be released from bureaucratic control on the factory floor," he says, "that's democracy. Can we make that work? That's our priority." His is the "economic generation," and it would be nice if it could completely transform China so that other issues could occupy the next generation. "But we can't," he says. "Xuyao shijian. It takes time."

So come July 1, Hong Kong will not be the only locus of ideas and accomplishments that threaten the communists' hold on power. The erosion of the old ideology has led to an astonishing amount of de facto independence in economic activity, in political activity. Because of the reforms the authorities themselves set in motion, says Fang Jing, a Beijing schoolteacher, "we have opened the door to change. You can't keep new ideas out, and you can't slam the door shut again." The very inequalities unleashed in the sprawling nation, says Wang Shi, will keep pushing development forward as each town or region strives to catch up with another. "People simply won't go backward," he says, "so we'll continue to go forward. The government can't stop it. It won't stop it."

If Hong Kong is not the only force for change on the mainland, it is the most advanced and sophisticated one. Mainland firms will be hiring Hong Kong's expert middle managers, who will be disseminating their "subversive" Western ideas. "Step by step," thinks Bill Chak Hin Fa, a Hong Kong teacher and CD producer, "China will become more like us." It may turn out that Hong Kong will change China far more than China can hope to change Hong Kong.